i3 Verticals, Inc. 10-Q

Item 1. Financial Statements 3 i3 Verticals, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share amounts) December 31, September 30, 2025 2025 Assets Current assets Cash and cash equivalents $ 37,523 $ 66,672 Accounts receivable, net 47,812 58,467 Settlement assets 1,400 411 Prepaid expenses and other current assets 13,654 12,075 Total current assets 100,389 137,625 Property and equipment, net 6,319 7,181 Restricted cash 250 250 Capitalized software, net 46,930 48,314 Goodwill 248,469 248,469 Intangible assets, net 132,938 135,797 Deferred tax asset 48,378 49,058 Operating lease right-of-use assets 4,473 4,577 Other assets 7,785 7,140 Total assets $ 595,931 $ 638,411 Liabilities and equity Liabilities Current liabilities Accounts payable $ 4,112 $ 6,248 Accrued expenses and other current liabilities 20,743 24,525 Settlement obligations 1,400 411 Deferred revenue 34,198 37,678 Current portion of operating lease liabilities 1,806 1,827 Total current liabilities 62,259 70,689 Long-term tax receivable agreement obligations 32,386 32,191 Operating lease liabilities, less current portion 2,791 2,964 Other long-term liabilities 15,154 14,844 Total liabilities 112,590 120,688 Commitments and contingencies (see Note 14) Stockholders' equity Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2025 and September 30, 2025 — — Class A common stock, par value $ 0.0001 per share, 150,000,000 shares authorized; 22,609,537 and 23,983,125 shares issued and outstanding as of December 31, 2025 and September 30, 2025, respectively 2 2 Class B common stock, par value $ 0.0001 per share, 40,000,000 shares authorized; 8,381,681 and 8,381,681 shares issued and outstanding as of December 31, 2025 and September 30, 2025, respectively 1 1 Additional paid-in capital 239,749 271,310 Accumulated earnings 118,754 118,270 Total stockholders' equity 358,506 389,583 Non-controlling interest 124,835 128,140 Total equity 483,341 517,723 Total liabilities and equity $ 595,931 $ 638,411 See Notes to the Interim Condensed Consolidated Financial Statements 4 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except share and per share amounts) Three months ended December 31, 2025 2024 Revenue $ 52,671 $ 52,221 Operating expenses Other costs of services (excluding depreciation and amortization) 17,582 15,576 Selling, general and administrative 26,989 26,479 Depreciation and amortization 6,865 6,861 Change in fair value of contingent consideration ( 374 ) 1,252 Total operating expenses 51,062 50,168 Income from operations 1,609 2,053 Other (income) expenses Interest expense 381 680 Other income ( 561 ) ( 1,826 ) Total other income ( 180 ) ( 1,146 ) Income before income taxes 1,789 3,199 Provision for income taxes 704 409 Net income from continuing operations 1,085 2,790 Net (loss) income from discontinued operations, net of income taxes ( 138 ) 318 Net income 947 3,108 Net income from continuing operations attributable to non-controlling interest 509 935 Net (loss) income from discontinued operations attributable to non-controlling interest ( 46 ) 117 Net income attributable to non-controlling interest 463 1,052 Net income from continuing operations attributable to i3 Verticals, Inc. 576 1,855 Net (loss) income from discontinued operations attributable to i3 Verticals, Inc. ( 92 ) 201 Net income attributable to i3 Verticals, Inc. $ 484 $ 2,056 Net income per share attributable to Class A common stockholders from continuing operations: Basic $ 0.02 $ 0.08 Diluted $ 0.02 $ 0.08 Net (loss) income per share attributable to Class A common stockholders from discontinued operations: Basic $ 0.00 $ 0.01 Diluted $ 0.00 $ 0.01 Weighted average shares of Class A common stock outstanding: Basic, for continuing operations 23,675,075 23,551,352 Diluted, for continuing operations 25,091,754 34,057,196 Basic, for discontinued operations 23,675,075 23,551,352 Diluted, for discontinued operations 32,056,756 24,031,016 See Notes to the Interim Condensed Consolidated Financial Statements 5 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (In thousands, except share amounts) Class A Common Stock Class B Common Stock Additional Paid-In Capital Retained Earnings Non-Controlling Interest Total Equity Shares Amount Shares Amount Balance at September 30, 2025 23,983,125 $ 2 8,381,681 $ 1 $ 271,310 $ 118,270 $ 128,140 $ 517,723 Equity-based compensation — — — — 5,178 — — 5,178 Net income — — — — — 484 463 947 Distributions to non-controlling interest holders — — — — — — 93 93 Exercise or release of equity-based awards 149,250 — — — ( 2,283 ) — — ( 2,283 ) Repurchases of Class A common stock ( 1,522,838 ) — — — ( 38,317 ) — — ( 38,317 ) Allocation of equity to non-controlling interests — — — — 3,861 — ( 3,861 ) — Balance at December 31, 2025 22,609,537 $ 2 8,381,681 $ 1 $ 239,749 $ 118,754 $ 124,835 $ 483,341 Class A Common Stock Class B Common Stock Additional Paid-In Capital Retained Earnings Non-Controlling Interest Total Equity Shares Amount Shares Amount Balance at September 30, 2024 23,882,035 $ 2 10,032,676 $ 1 $ 279,335 $ 100,397 $ 135,624 $ 515,359 Equity-based compensation — — — — 3,814 — — 3,814 Net income — — — — — 2,056 1,052 3,108 Redemption of common units in i3 Verticals, LLC 17,577 — ( 17,577 ) — 237 — ( 237 ) — Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 14 — — 14 Exercise or release of equity-based awards 34,423 — — — 29 — — 29 Repurchases of Class A common stock ( 496,785 ) — — — ( 11,190 ) — — ( 11,190 ) Allocation of equity to non-controlling interests — — — — 293 — ( 293 ) — Balance at December 31, 2024 23,437,250 $ 2 10,015,099 $ 1 $ 272,532 $ 102,453 $ 136,146 $ 511,134 See Notes to the Interim Condensed Consolidated Financial Statements 6 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Three months ended December 31, 2025 2024 Cash flows from operating activities: Net income $ 947 $ 3,108 Adjustments to reconcile net income (loss) from operating activities: Depreciation and amortization 6,865 7,684 Equity-based compensation 5,178 3,814 Amortization of debt issuance costs 216 280 Provision for deferred income taxes ( 71 ) ( 715 ) Non-cash lease expense 539 864 Changes in non-cash contingent consideration expense from original estimate ( 374 ) 1,377 Other non-cash adjustments to net income 524 ( 320 ) Changes in operating assets: Accounts receivable 10,256 1,353 Prepaid expenses and other current assets ( 1,586 ) ( 4,779 ) Other assets ( 918 ) 156 Changes in operating liabilities: Accounts payable ( 2,136 ) 1,807 Accrued expenses and other current liabilities ( 4,710 ) ( 5,899 ) Deferred revenue ( 862 ) 3,833 Operating lease liabilities ( 622 ) ( 906 ) Other long-term liabilities 877 ( 102 ) Contingent consideration paid in excess of original estimates — ( 60 ) Net cash provided by operating activities 14,123 11,495 Cash flows from investing activities: Expenditures for property and equipment ( 315 ) ( 471 ) Proceeds from sale of property and equipment 448 1,463 Expenditures for capitalized software ( 1,965 ) ( 2,410 ) Net cash used in investing activities ( 1,832 ) ( 1,418 ) Cash flows from financing activities: Proceeds from revolving credit facility 612 1,743 Payments on revolving credit facility ( 612 ) ( 1,743 ) Payments for repurchases of Class A common stock ( 37,938 ) ( 11,190 ) Net proceeds from settlement obligations 989 573 Payments for required distributions to members or on behalf of members for tax obligations ( 23 ) — Proceeds from stock option exercises 129 150 Payments for employees' tax withholdings from net settled stock option exercises and RSU releases ( 3,608 ) — Net cash used in financing activities ( 40,451 ) ( 10,467 ) Net decrease in cash, cash equivalents and restricted cash ( 28,160 ) ( 390 ) Cash, cash equivalents and restricted cash at beginning of period 67,333 89,597 Cash, cash equivalents and restricted cash at end of period $ 39,173 $ 89,207 Supplemental disclosure of cash flow information: Cash paid for interest $ 165 $ 59 Cash paid for income taxes, net of refunds $ 870 $ 50 See Notes to the Interim Condensed Consolidated Financial Statements 7 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED) (In thousands) The following tables provide reconciliations of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to that shown in the condensed consolidated statements of cash flows: September 30, 2025 2024 Beginning balance Cash and cash equivalents $ 66,672 $ 86,541 Settlement assets 411 632 Restricted cash 250 2,424 Total cash, cash equivalents, and restricted cash $ 67,333 $ 89,597 December 31, 2025 2024 Ending balance Cash and cash equivalents $ 37,523 $ 85,552 Settlement assets 1,400 1,205 Restricted cash 250 2,450 Total cash, cash equivalents, and restricted cash $ 39,173 $ 89,207 See Notes to the Interim Condensed Consolidated Financial Statements 8 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 1. ORGANIZATION AND OPERATIONS i3 Verticals, Inc. (the “Company”) was formed as a Delaware corporation on January 17, 2018. The Company was formed for the purpose of completing an initial public offering (“IPO”) of its Class A common stock and other related transactions in order to carry on the business of i3 Verticals, LLC and its subsidiaries. i3 Verticals, LLC was founded in 2012 and delivers software solutions seamlessly integrated with our proprietary payment facilitator platform to customers in strategic vertical markets. The Company’s headquarters are located in Nashville, Tennessee, with operations throughout the United States. Unless the context otherwise requires, references to “we,” “us,” “our,” “i3 Verticals” and the “Company” refer to i3 Verticals, Inc. and its subsidiaries, including i3 Verticals, LLC. In connection with the IPO, the Company completed certain reorganization transactions, which, among other things, resulted in i3 Verticals, Inc. being the sole managing member of i3 Verticals, LLC (the “Reorganization Transactions”). Following the completion of the IPO and Reorganization Transactions, the Company is a holding company and the principal asset that it owns are the common units of i3 Verticals, LLC. i3 Verticals, Inc. operates and controls all of i3 Verticals, LLC's operations and, through i3 Verticals, LLC and its subsidiaries, conducts i3 Verticals, LLC's business. i3 Verticals, Inc. has a majority economic interest in i3 Verticals, LLC. As the sole managing member of i3 Verticals, LLC, i3 Verticals, Inc. consolidates the financial results of i3 Verticals, LLC and reports a non-controlling interest representing the Common Units of i3 Verticals, LLC held by owners other than i3 Verticals, Inc. (the “Continuing Equity Owners”). 2. DISCONTINUED OPERATIONS Healthcare RCM Business Divestiture During the three months ended June 30, 2025, i3 Verticals, LLC and i3 Healthcare Solutions, LLC, a wholly-owned subsidiary of i3 Verticals, LLC (“Healthcare RCM Seller,” and collectively with i3 Verticals, LLC, the “Healthcare RCM Seller Parties”), completed the sale of the equity interests of certain wholly-owned subsidiaries of the Healthcare RCM Seller (the “Healthcare RCM Acquired Entities”) which owned and operated the Company's healthcare revenue cycle management business, including its associated proprietary technology (the “Healthcare RCM Business”), to Infinx, Inc. (“Healthcare RCM Buyer”), a Texas corporation, pursuant to the terms of that certain Securities Purchase Agreement dated as of May 5, 2025, by and among Healthcare RCM Buyer and the Healthcare RCM Seller Parties (the “Healthcare RCM Purchase Agreement;” the transactions contemplated by the Healthcare RCM Purchase Agreement, the “Healthcare RCM Transactions”). In addition, immediately prior to the sale of the equity interests of the Healthcare RCM Acquired Entities pursuant to the Healthcare RCM Purchase Agreement, i3 Verticals, LLC and certain of its subsidiaries contributed and/or assigned certain assets and certain liabilities related to the Healthcare RCM Business to the Healthcare RCM Acquired Entities. The purchase price payable by Healthcare RCM Buyer to Healthcare RCM Seller for the equity interests of the Healthcare RCM Acquired Entities was $ 96,252 , paid in cash at closing, after giving effect to post-closing net working capital, indebtedness and cash adjustments. The Healthcare RCM Business comprised the majority of the Company's former Healthcare segment. 9 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) At the closing of the transactions contemplated by the Healthcare RCM Purchase Agreement, the Company entered into a transition services agreement with Infinx ("Infinx TSA"), pursuant to which, among other things, the Company or affiliates thereof are providing certain information technology and operational transition services to Infinx for a period of time after the closing, and an employee leasing agreement with Infinx ("Infinx ELA"), pursuant to which the Company leased employees of the Healthcare RCM Business to Infinx for a limited period of time following the closing in accordance with the terms thereof. The obligations under the Infinx TSA are planned to be complete in the first quarter of fiscal 2026. The Infinx ELA completed on July 31, 2025. Revenue earned under the Infinx TSA and Infinx ELA are reported in other income and expenses incurred for which the Company is reimbursed through the Infinx TSA and Infinx ELA are reported in selling, general and administrative expenses within the Company's condensed consolidated statements of operations. Income under the Infinx TSA during the three months ended December 31, 2025 was $ 134 . Aggregate costs incurred related to the sale of the Healthcare RCM Business during the year ended September 30, 2025 that were not considered incremental direct costs to transact the sale, were approximately $ 1,332 and were expensed as incurred. These costs were primarily incurred during the third fiscal quarter of the fiscal year ended September 30, 2025 and include fees for third-party advisory, consulting, legal and professional services, as well as other items associated with the sale of the Healthcare RCM Business. The expenses are reflected within selling, general and administrative expenses within the Company's condensed consolidated statements of operations. The financial results of the Healthcare RCM Business are included in income from discontinued operations, net of income taxes on the Company’s condensed consolidated statements of operations. The following table presents financial results of Healthcare RCM Business for the three months ended December 31, 2025 and 2024: Three months ended December 31, 2025 2024 Revenue $ — $ 9,736 Operating expenses Other costs of services (excluding depreciation and amortization) — 5,721 Selling, general and administrative — 2,421 Depreciation and amortization — 823 Change in fair value of contingent consideration — 125 Total operating expenses — 9,090 Income from operations — 646 Other expenses 169 — (Loss) income before income taxes from discontinued operations ( 169 ) 646 (Benefit from) provision for income taxes ( 31 ) 114 Net (loss) income from discontinued operations ( 138 ) 532 Net (loss) income from discontinued operations attributed to non-controlling interest ( 46 ) 193 Net (loss) income from discontinued operations attributable to i3 Verticals, Inc. $ ( 92 ) $ 339 10 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Company has elected to not separately disclose discontinued operations on its condensed consolidated statement of cash flows. The following table presents cash flows from discontinued operations for major captions on the condensed consolidated financial statements: Three months ended December 31, 2024 Depreciation and amortization $ 823 Equity-based compensation $ 208 Non-cash lease expense $ 259 Increase in non-cash contingent consideration expense from original estimate $ 125 Expenditures for capitalized software $ ( 126 ) The following table presents significant non-cash investing and financing activities for major captions on the consolidated financial statements: Three months ended December 31, 2024 Right-of-use assets obtained in exchange for operating lease obligations $ 266 Merchant Services Business Divestiture During the year ended September 30, 2024, the Company made the strategic decision to discontinue a significant segment of its operations constituting its Merchant Services Business (as defined below). In this regard, on September 20, 2024, i3 Verticals, LLC, and i3 Holdings Sub, Inc., a wholly-owned subsidiary of i3 Verticals, LLC (“Corporation Seller,” and collectively with i3 Verticals, LLC, the “Merchant Services Sellers”) completed the transactions (such closing, the “Closing”) contemplated by that certain Securities Purchase Agreement dated as of June 26, 2024 (the “Merchant Services Purchase Agreement”), by and among i3 Verticals, LLC, Corporation Seller, the Company (solely for the purpose of providing a guaranty of the obligations of Merchant Services Sellers as set forth in the Merchant Services Purchase Agreement), Payroc Buyer, LLC (“Merchant Services Buyer”), and Payroc WorldAccess, LLC (solely for the purpose of providing a guaranty of the obligations of Merchant Services Buyer as set forth in the Merchant Services Purchase Agreement). Pursuant to the terms of the Merchant Services Purchase Agreement, the Merchant Services Sellers sold to Merchant Services Buyer the equity interests of certain direct and indirect wholly-owned subsidiaries of the Merchant Services Sellers (the “Merchant Services Acquired Entities”) primarily comprising the Company’s merchant services business, including its associated proprietary technology (the “Merchant Services Business”), after giving effect to the contribution of certain assets and the assignment of certain liabilities associated with the Merchant Services Business from i3 Verticals, LLC and certain affiliates to the Merchant Services Acquired Entities pursuant to a contribution agreement which was entered into immediately prior to the Closing (collectively, the "Merchant Services Transactions"). Pursuant to the terms of the Merchant Services Purchase Agreement, Merchant Services Buyer paid to the Merchant Services Sellers an aggregate purchase price of approximately $ 439,516 paid in cash at closing, after giving effect to post-closing net working capital, indebtedness and cash adjustments. The Merchant Services Business comprised the Company's entire former Merchant Services segment and a small portion of the Company's former Software and Services segment. In connection with the closing of the Merchant Services Transactions, the Company entered into a transition services agreement with Payroc ("Payroc TSA"), pursuant to which, among other things, the Company or affiliates thereof provides certain information technology and operational transition services to Payroc for a period of time after the closing, and a processing services agreement with Payroc ("Payroc PSA"), pursuant to which the parties provide certain payment processing services to customers of each party following the closing in accordance with the terms thereof. The obligations under the Payroc TSA were substantially complete as of December 31, 2025. The obligations under the Payroc PSA are planned to be complete is in the first quarter of fiscal 2029. Revenue earned under the Payroc TSA and Payroc PSA are reported in other income, and expenses incurred for which the Company is reimbursed through the Payroc TSA and Payroc PSA are reported in selling, general and 11 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) administrative expenses within the Company's condensed consolidated statements of operations. Income under the Payroc TSA and Payroc PSA during the three months ended December 31, 2025 and 2024 was $ 31 and $ 495 , respectively. Aggregate costs incurred related to the Merchant Services Transactions during the year ended September 30, 2024 that were not considered incremental direct costs to transact the sale, were approximately $ 2,626 and were expensed as incurred. These costs were primarily incurred during the second and third fiscal quarters of the year ended September 30, 2024 and include fees for third-party advisory, consulting, legal and professional services, as well as other items associated with the Merchant Services Transactions. The expenses are reflected within selling, general and administrative expenses within the Company's condensed consolidated statements of operations. The financial results of the Merchant Services Business are included in income from discontinued operations, net of income taxes on the Company’s consolidated statements of operations. The following table presents financial results of Merchant Services Business for the three months ended December 31, 2024: Three months ended December 31, 2024 Revenue $ — Operating expenses Other costs of services (excluding depreciation and amortization) — Selling, general and administrative — Depreciation and amortization — Total operating expenses — Income from operations — Other expenses Interest expense, net — Other expense 253 Total other expenses 253 Loss before income taxes from discontinued operations ( 253 ) Benefit from income taxes ( 39 ) Net loss from discontinued operations ( 214 ) Net loss from discontinued operations attributed to non-controlling interest ( 76 ) Net loss from discontinued operations attributable to i3 Verticals, Inc. $ ( 138 ) 12 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company and its subsidiaries as of December 31, 2025 and for the three months ended December 31, 2025 and 2024. The results of operations for the three months ended December 31, 2025 and 2024 are not necessarily indicative of the operating results for the full year. As permitted by the rules and regulations of the SEC, certain information and disclosures otherwise included in the notes to the consolidated financial statements have been condensed or omitted from the summary of significant accounting policies. The Company believes the disclosures are adequate to make the information presented not misleading. It is recommended that these interim condensed consolidated financial statements be read in conjunction with the Company's consolidated financial statements and related footnotes for the years ended September 30, 2025 and 2024, included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2025 filed with the SEC on November 21, 2025. Principles of Consolidation These interim condensed consolidated financial statements include the accounts of the Company and its subsidiary companies. All intercompany accounts and transactions have been eliminated in consolidation. Restricted Cash Restricted cash represents funds held in escrow related to acquisitions or held-on-deposit with the processing bank pursuant to agreements to cover potential merchant losses. It is presented as long-term assets on the accompanying condensed consolidated balance sheets since the related agreements extend beyond the next twelve months. Following the adoption of Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows: Restricted Cash (Topic 230), the Company includes restricted cash along with the cash and cash equivalents balance for presentation in the consolidated statements of cash flows. Settlement Assets and Obligations Settlement assets and obligations result when funds are temporarily held or owed by the Company on behalf of merchants, consumers, schools, and other institutions. Timing differences, interchange expenses, merchant reserves and exceptional items cause differences between the amount received from the card networks and the amount funded to counterparties. These balances arising in the settlement process are reflected as settlement assets and obligations on the accompanying consolidated balance sheets. With the exception of merchant reserves, settlement assets or settlement obligations are generally collected and paid within one to four days . Settlement assets and settlement obligations were $ 1,400 as of December 31, 2025 and $ 411 as of September 30, 2025, respectively. Reclassifications Discontinued operations The results of operations for the Company's Merchant Services Business and Healthcare RCM Business have been reclassified as discontinued operations for all periods presented in the condensed consolidated statements of operations. Refer to Note 2 for additional information. 13 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Inventories Inventories consist of point-of-sale equipment to be sold to customers and are stated at the lower of cost, determined on a weighted average or specific basis, or net realizable value. Inventories were $ 3,022 and $ 2,516 at December 31, 2025 and September 30, 2025, respectively, and are included within prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets. Acquisitions Business acquisitions have been recorded using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), and, accordingly, the purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair value as of the date of acquisition. Where relevant, the fair value of contingent consideration included in an acquisition is calculated using a Monte Carlo simulation as well as a discounted cash flows analysis. The fair value of customer relationships and non-compete assets acquired is identified using the Income Approach. The fair values of trade names and internally-developed software acquired are identified using the Relief from Royalty Method. After the purchase price has been allocated, goodwill is recorded to the extent the total consideration paid for the acquisition, including the acquisition date fair value of contingent consideration, if any, exceeds the sum of the fair values of the separately identifiable acquired assets and assumed liabilities. Acquisition costs for business combinations are expensed when incurred and recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. Acquisitions not meeting the accounting criteria to be accounted for as a business combination are accounted for as an asset acquisition. An asset acquisition is recorded at its purchase price, inclusive of acquisition costs, which is allocated among the acquired assets and assumed liabilities based upon their relative fair values at the date of acquisition. The operating results of an acquisition are included in the consolidated statements of operations from the date of such acquisition. Acquisitions completed during the year ended September 30, 2025 contributed $ 766 and $ 150 of revenue and net income, respectively, to the results in the Company's condensed consolidated statements of operations for the three months ended December 31, 2025. Lease Expense Leases are recorded in accordance with ASC 842, Leases ("ASC 842). The Company elected the accounting policy practical expedients for all classes of underlying assets to (i) combine associated lease and non-lease components in a lease arrangement as a combined lease component and (ii) exclude recording short-term leases as right-of-use assets on the condensed consolidated balance sheets. At contract inception the Company determines whether an arrangement is, or contains a lease, and for each identified lease, evaluates the classification as operating or financing. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rate is a fully collateralized rate that considers the Company’s credit rating, market conditions and the term of the lease. The Company accounts for all components in a lease arrangement as a single combined lease component. Operating lease cost is recognized on a straight-line basis over the lease term. Total lease costs include variable lease costs, which are primarily comprised of the consumer price index adjustments and other changes based on rates, such as costs of insurance and property taxes. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and obligations. 14 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Revenue Recognition and Deferred Revenue Revenue is recognized as each performance obligation is satisfied, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company accrues for rights of refund, processing errors or penalties, or other related allowances based on historical experience. The Company utilized the portfolio approach practical expedient within ASC 606-10-10-4 Revenue from Contracts with Customers—Objectives and the significant financing component practical expedient within ASC 606-10-32-18 Revenue from Contracts with Customers—The Existence of a Significant Financing Component in the Contract in performing the analysis. The Company's revenue from continuing operations for the three months ended December 31, 2025 and 2024 is derived from the following sources: • Software and related services — Includes software as a service ("SaaS"), transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to the Company's software offerings; • Proprietary payments — Includes volume-based payment processing fees (“discount fees”) and other related fixed transaction or service fees; and • Other — Includes sales of equipment, non-software related professional services, bundled performance obligations for software sales and equipment leasing and other revenues. Revenues from the Company’s software are recognized when the related performance obligations are satisfied. Sales of software licenses are categorized into one of two categories of intellectual property in accordance with ASC 606, functional or symbolic. The key distinction is whether the license represents a right to use (functional) or a right to access (symbolic) intellectual property. The Company generates sales of one-time software licenses, which is functional intellectual property, and right to access license sales, which are symbolic intellectual property. Revenue from functional intellectual property is recognized at a point in time, when control of the software license transfers to the customer, while revenue from symbolic intellectual property is recognized over time, as control transfers to the customer. The Company also generates revenue from maintenance services related to these software licenses, which is recognized over the term of the agreement. The Company also offers access to its software under software-as-a-service (“SaaS”) arrangements, which represent services arrangements, and under which customers do not have the right to take possession of the software. Revenue from SaaS arrangements is recognized over time, over the term of the agreement. Contracts with professional services, such as training or installation, are evaluated to determine if the customer can benefit from these services independently, whether they can be provided by other available resources, or whether they are separately identifiable from other contract promises. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed or a specified per transaction amount, depending on the card type. The Company frequently enters into agreements with customers under which the customer engages the Company to provide both payment authorization services and transaction settlement services for all of the cardholder transactions of the customer, regardless of which issuing bank and card network to which the transaction relates. The Company’s core performance obligations are to stand ready to provide continuous access to the Company’s payment authorization services and transaction settlement services in order to be able to process as many transactions as its customers require on a daily basis over the contract term. These services are stand ready obligations, as the nature of the promise is to stand ready to process an undetermined quantity of transactions. Under a stand-ready obligation, the Company’s performance obligation is defined by each time increment rather than by the underlying activities satisfied over time based on days elapsed. Because the service of standing ready is substantially the same each day and has the same pattern of transfer to the customer, the Company has determined that its stand-ready performance obligation comprises a series of distinct days of service. Discount fees are recognized each day based on the volume or transaction count at the time the merchants’ transactions are processed. 15 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Company follows the requirements of ASC 606-10-55 Revenue from Contracts with Customers—Principal versus Agent Considerations , which states that the determination of whether a company should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement. The determination of gross versus net recognition of revenue requires judgment that depends on whether the Company controls the good or service before it is transferred to the merchant or whether the Company is acting as an agent of a third party. The assessment is provided separately for each performance obligation identified. Under its agreements, the Company incurs interchange and network pass-through charges from the third-party card issuers and card networks, respectively, related to the provision of payment authorization services. The Company has determined that it is acting as an agent with respect to these payment authorization services, based on the following factors: (1) the Company has no discretion over which card issuing bank will be used to process a transaction and is unable to direct the activity of the merchant to another card issuing bank, and (2) interchange and card network rates are pre-established by the card issuers or card networks, and the Company has no latitude in determining these fees. Therefore, revenue allocated to the payment authorization performance obligation is presented net of interchange and card network fees paid to the card issuing bank and card network, respectively, for the three months ended December 31, 2025 and 2024. With regards to the Company's discount fees, generally, where the Company has control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale equal to the full amount of the discount charged to the merchant, less interchange and network fees. Revenues are also derived from a variety of transaction fees, which are charged for transacting on our proprietary payment facilitator platform and software solutions, and fees for other miscellaneous services. Revenues derived from such fees are recognized in the time the transactions occur and when there are no further performance obligations remaining to be satisfied. Revenue from the sale of equipment, is recognized upon transfer of ownership to the customer, after which there are no further performance obligations remaining to be satisfied. Arrangements may contain multiple performance obligations, such as payment authorization services, transaction settlement services, hardware, software products, SaaS, maintenance, and professional installation and training services. Revenues are allocated to each performance obligation based on the standalone selling price of each good or service. The selling price for a deliverable is based on standalone selling price, if available, the adjusted market assessment approach, estimated cost plus margin approach, or residual approach. The Company establishes estimated selling price, based on the judgment of the Company's management, considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life cycle. In arrangements with multiple performance obligations, the Company applies significant judgement in determining the allocation of the transaction price at inception of the arrangement and uses the standalone selling prices for the majority of the Company's revenue recognition. Revenues from sales of the Company ’ s hardware and software elements are recognized when each performance obligation has been satisfied which has been determined to be upon the delivery of the product. Revenues derived from service fees are recognized over time in accordance with our satisfaction of our performance obligations. Revenue from bundled performance obligations for software sales and equipment leasing is recognized over time as a single performance obligation. Lease income is recognized in accordance with ASC 842, and the leased equipment is classified as fixed assets and depreciated over its useful life. The Company’s professional services, including training, installation, and repair services are recognized as revenue as these services are performed. 16 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The tables below present a disaggregation of the Company's revenue from contracts with customers for continuing operations by product. The Company's products are defined as follows: • Software and related services — Includes SaaS, transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to the Company's software offerings; • Proprietary payments — Includes discount fees and other related fixed transaction or service fees; and • Other — Includes sales of equipment, non-software related professional services, bundled performance obligations for software sales and equipment leasing and other revenues. Three months ended December 31, 2025 2024 Software and related services revenue $ 35,682 $ 36,604 Proprietary payments revenue 14,475 13,436 Other revenue 2,514 2,181 Total revenue $ 52,671 $ 52,221 The tables below present a disaggregation of the Company's revenue from contracts with customers from continuing operations by timing of transfer of goods or services. The Company's revenue included in each category are defined as follows: • Revenue earned over time — Includes SaaS, sales of software sold as symbolic intellectual property, professional services, ongoing support, discount fees or other stand-ready obligations; and • Revenue earned at a point in time — Includes software licenses sold as functional intellectual property, equipment, or point in time service fees that are not stand-ready obligations. Three months ended December 31, 2025 2024 Revenue earned over time $ 47,648 $ 47,400 Revenue earned at a point in time 5,023 4,821 Total revenue $ 52,671 $ 52,221 Contract Assets The Company bills for certain software and related services sales and fixed fee professional services upon pre-determined milestones in the contracts. Therefore, the Company may have contract assets other than trade accounts receivable for performance obligations that are partially completed, which would typically represent consulting services provided before a milestone is completed in a contract. Additionally, contract assets also include software licenses sold as a right to use license but paid for under a non-cancellable subscription model. Under this structure, the license revenue is recognized upfront while a portion of the revenue is unbilled. Unbilled amounts associated with these professional services and software licenses sold under the subscription model are presented as accounts receivable as the Company has an unconditional right to payment for services performed. As of December 31, 2025 and September 30, 2025, the Company’s contract assets from contracts with customers was $ 9,378 and $ 9,211 , respectively. Contract Liabilities Deferred revenue represents amounts billed to customers by the Company for services contracts. Payment is typically collected at the start of the contract term. The initial prepaid contract agreement balance is deferred. The 17 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) balance is then recognized as the services are provided over the contract term. Deferred revenue that is expected to be recognized as revenue within one year is recorded as short-term deferred revenue and the remaining portion is recorded as other long-term liabilities in the condensed consolidated balance sheets. The terms for most of the Company's contracts with a deferred revenue component are one year. Substantially all of the Company's deferred revenue is anticipated to be recognized within the next year. The following tables present the changes in deferred revenue as of and for the three months ended December 31, 2025 and 2024, respectively: Balance at September 30, 2025 $ 38,486 Deferral of revenue 15,133 Recognition of unearned revenue ( 15,999 ) Balance at December 31, 2025 $ 37,620 Balance at September 30, 2024 $ 39,156 Deferral of revenue 16,881 Recognition of unearned revenue ( 13,645 ) Balance at December 31, 2024 $ 42,392 Costs to Obtain and Fulfill a Contract The Company capitalizes incremental costs to obtain new contracts and contract renewals and amortizes these costs on a straight-line basis as an expense over the benefit period, which is generally the expected customer life, unless a commensurate payment is not expected at renewal. As of December 31, 2025 and September 30, 2025, the Company had $ 1,566 and $ 1,412 , respectively, of capitalized contract costs, which relates to commissions paid to employees as well as other incentives given to customers to obtain new sales, included within “Other assets" on the condensed consolidated balance sheets. The Company recorded expense from continuing operations related to these costs of $ 58 and $ 31 for the three months ended December 31, 2025 and 2024, respectively. The Company expenses sales commissions as incurred for the Company's sales commission plans that are paid on recurring monthly revenues, portfolios of existing customers, or have a substantive stay requirement prior to payment. Other Cost of Services Other costs of services include costs directly related to the Company's software and related services, including personnel costs related to installation of the Company's software, conversion of client data, training client personnel, customer support activities and various other services provided directly to customers and hosting and related software costs for directly supporting the Company's customers. Additionally, other costs of services include costs directly attributable to payment processing services such as processing and bank sponsorship. Losses resulting from chargebacks against a customer are included in other cost of services. Residual payments to the Company's distribution partners and the cost of equipment sold is also included in cost of services. Amortization arising from capitalized software development is not included in other cost of services. Other costs of services are recognized at the time the related revenue is recognized. The Company accounts for all governmental taxes associated with revenue transactions on a net basis. Use of Estimates The preparation of condensed consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and 18 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, goodwill and intangible asset impairment review, determination of performance obligations for revenue recognition, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities as well as the related valuation allowances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Segment Information The Company has identified its Chief Executive Officer as the Company's Chief Operating Decision Maker ("CODM"). The Company’s CODM reviews discrete financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance which is based on consolidated information about our revenues, income from operations, and other key financial data. All significant operating decisions are made by analyzing the Company as a single operating segment and as a result, the Company has determined that it operates as a single reportable segment as of December 31, 2025. See Note 16 to our condensed consolidated financial statements for additional information. Recent Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 will provide improvements to the income tax disclosures primarily related to the income taxes paid and rate reconciliation, and how legislation changes may affect future capital allocation and cash flow forecasts. The amendment will improve the consistency in which companies provide tax information, and will further increase the transparency of related tax risks and operational opportunities. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company will not be required to present the effects of adoption of ASU 2023-09 until the Form 10-K filed for the annual period beginning on October 1, 2025. The Company is currently evaluating the impact of the adoption of ASU 2023-09 on the Company’s financial statement disclosures. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"). ASU 2024-03 will require companies to disaggregate, within the notes to the financial statements, certain expenses presented on the face of the financial statements to enhance transparency and help investors better understand an entity's performance. The amendment will specifically require that an entity disclose the amounts related to purchases of inventory, employee compensation, depreciation and intangible asset amortization. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company will not be required to adopt ASU 2024-03 until October 1, 2027. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on the Company’s financial statement disclosures. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use-Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"). ASU 2025 removes the prescriptive software development “project stages” and requires capitalization of software costs once (1) management authorizes and commits funding and (2) completion and use are probable. Entities must evaluate significant development uncertainty related to technological innovations or performance requirements. The amendments also require Subtopic 360-10 disclosures for all capitalized internal-use software costs and clarify that intangible asset disclosures under Subtopic 350-30 are not required. The 19 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) standard is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company will not be required to adopt ASU 2025-06 until October 1, 2028. The Company is currently evaluating the impact of the adoption of ASU 2025-06 on the Company’s financial statement disclosures. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements ("ASU 2025-11"). ASU 2025-11 provides clarity on current interim reporting requirements. The amendments improve the navigability of required interim disclosures and enhance consistency for all entities by clarifying the form and content of interim financial statements in accordance with GAAP. Additionally, the standard introduces a disclosure principle requiring entities to report all events since the end of the last annual reporting period that have a material impact on the Company. The standard is effective for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company will not be required to adopt ASU 2025-11 until October 1, 2028. The Company is currently evaluating the impact of the adoption of ASU 2025-11 on the Company’s financial statement disclosures. 4. ACQUISITIONS During the three months ended December 31, 2025, the Company did not acquire any businesses. During the year ended September 30, 2025, the Company acquired the following businesses: Purchase of Utility Billing Software Company On April 1, 2025, the Company completed the acquisition of substantially all of the assets of a business (the "Utility Billing Software Company") to expand the Company’s public sector utility billing software offerings. Total purchase consideration was $ 10,260 , including $ 9,000 in cash funded by proceeds from the Company's revolving credit facility, and $ 1,260 in the acquisition date estimated fair value of contingent cash consideration (the final amount of such contingent cash payment of up to $ 5,000 is dependent upon achievement of specified financial performance targets, as defined in the purchase agreement). The additional cash consideration of up to $ 5,000 , in the aggregate, is to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreement, for performance periods extending through September 2027. The Company determines the acquisition date fair values of the liabilities for the contingent consideration using a Monte Carlo simulation as well as a discounted cash flow analysis. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. See additional disclosures in Note 12. The goodwill associated with the business acquisition is deductible for tax purposes. The acquired customer relationships intangible asset has an estimated amortization period of fifteen years . The acquired trade name has an amortization period of two years . The acquired capitalized software has an amortization period of seven years . Acquisition-related costs for this acquisition amounted to approximately $ 96 and were included in selling, general and administrative on our consolidated statement of operations and were expensed as incurred. 20 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Summary of the Utility Billing Software Company The preliminary fair values assigned to certain assets and liabilities assumed, as of the acquisition date, were as follows: Accounts receivable $ 792 Property and equipment 200 Capitalized software 380 Customer relationships 4,610 Trade name 100 Goodwill 5,129 Total assets acquired 11,211 Deferred revenue, current 951 Net assets acquired $ 10,260 Other Business Combinations during the year ended September 30, 2025 During the year ended September 30, 2025, the Company purchased certain assets of a business to expand the Company’s customer footprint. Total purchase consideration was $ 2,000 in cash funded from cash on hand. In connection with this purchase, the Company allocated approximately $ 83 to property and equipment, approximately $ 1,700 to customer relationships, $ 141 to deferred revenue, $ 5 to non-compete agreements and the remainder, approximately $ 352 , to goodwill, all of which is deductible for tax purposes. The acquired customer relationships intangible asset has an estimated amortization period of fifteen years . Pro Forma Results of Operations for 2025 Business Combinations The following unaudited supplemental pro forma results of operations have been prepared as though each of the acquired businesses in the year ended September 30, 2025 had occurred on October 1, 2024. Pro forma adjustments were made to reflect the impact of depreciation and amortization, changes to executive compensation and the revised debt load, all in accordance with ASC 805. This supplemental pro forma information does not purport to be indicative of the results of operations that would have been attained had the acquisitions been made on these dates, or of results of operations that may occur in the future. December 31, 2024 Revenue $ 52,882 Net income from continuing operations $ 2,868 21 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS A summary of the Company's prepaid expenses and other current assets as of December 31, 2025 and September 30, 2025 is as follows: December 31, September 30, 2025 2025 Inventory $ 3,022 $ 2,516 Prepaid licenses 5,761 5,874 Prepaid insurance 1,388 222 Notes receivable — current portion 195 195 Other current assets 3,288 3,268 Prepaid expenses and other current assets $ 13,654 $ 12,075 6. GOODWILL AND INTANGIBLE ASSETS The carrying amount of goodwill was $ 248,469 as of both December 31, 2025 and September 30, 2025. Intangible assets consisted of the following as of December 31, 2025: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Customer relationships $ 179,650 $ ( 47,280 ) $ 132,370 9 to 20 years – straight-line Trade names 2,591 ( 2,123 ) 468 2 to 5 years – straight-line Non-compete agreements and other intangible assets 175 ( 91 ) 84 1 to 8 years – straight-line Total finite-lived intangible assets 182,416 ( 49,494 ) 132,922 Indefinite-lived intangible assets: Trademarks 16 — 16 Total identifiable intangible assets $ 182,432 $ ( 49,494 ) $ 132,938 Amortization expense from continuing operations for intangible assets amounted to $ 2,858 and $ 2,793 for the three months ended December 31, 2025, and 2024, respectively. 22 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Based on net carrying amounts at December 31, 2025, the Company's estimate of future amortization expense for continuing operations for intangible assets are presented in the table below for fiscal years ending September 30: 2026 (nine months remaining) $ 8,363 2027 10,954 2028 10,766 2029 10,739 2030 10,694 Thereafter 81,406 $ 132,922 7. ACCRUED EXPENSES AND OTHER LIABILITIES A summary of the Company's accrued expenses and other current liabilities as of December 31, 2025 and September 30, 2025 is as follows: December 31, September 30, 2025 2025 Accrued wages, bonuses, commissions and vacation $ 2,861 $ 6,587 Accrued interest 155 155 Accrued contingent consideration — current portion 1,943 82 Accrued tax distributions 2,031 2,147 Accrued income tax expense 829 2,760 Tax receivable agreement liability — current portion 2,525 2,720 Customer deposits 1,363 461 Employee health self-insurance liability — 13 Accrued third-party software expenses 2,701 2,674 Accrued interchange 3,466 3,139 Other accrued expenses 2,869 3,787 Accrued expenses and other current liabilities $ 20,743 $ 24,525 A summary of the Company's long-term liabilities as of December 31, 2025 and September 30, 2025 is as follows: December 31, September 30, 2025 2025 Accrued contingent consideration — long-term portion $ 1,254 $ 3,489 Deferred tax liability — long-term 8,243 8,994 Deferred revenue — long-term 3,422 808 Other long-term liabilities 2,235 1,553 Total other long-term liabilities $ 15,154 $ 14,844 23 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 8. LONG-TERM DEBT, NET As of both December 31, 2025 and September 30, 2025, we had no borrowings outstanding under the 2023 Senior Secured Credit Facility. 2020 Exchangeable Notes Offering On February 18, 2020, i3 Verticals, LLC issued $ 138,000 aggregate principal amount of 1.0 % Exchangeable Senior Notes due 2025 (the “Exchangeable Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Company received approximately $ 132,762 in net proceeds from the sale of the Exchangeable Notes, as determined by deducting estimated offering expenses paid to third-parties from the aggregate principal amount. i3 Verticals, LLC issued the Exchangeable Notes pursuant to an Indenture, dated as of February 18, 2020, among i3 Verticals, LLC, the Company and U.S. Bank Trust Company National Association, as trustee (the “Indenture”). The Exchangeable Notes bore interest at a fixed rate of 1.00 % per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. In accordance with the terms of the Indenture, as of August 15, 2024, the Exchangeable Notes became exchangeable at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The Exchangeable Notes matured and the remaining principal balance was repaid in full on February 15, 2025, as further described below. During the fiscal year ended September 30, 2020, we repurchased $ 21,000 in aggregate principal amount of Exchangeable Notes in open market purchases. In addition, on December 21, 2023, i3 Verticals, LLC entered into agreements to repurchase an additional portion of its Exchangeable Notes pursuant to privately negotiated transactions with a limited number of holders of the Exchangeable Notes (the "Exchangeable Note Repurchases"). The repurchase payments were determined by the Company’s average stock price over the 15 trading-day measurement period ended January 16, 2024. The closing of the Exchangeable Note Repurchases occurred on January 18, 2024, and the Company paid $ 87,391 to repurchase $ 90,777 in aggregate principal amount of its Exchangeable Notes and to repay approximately $ 386 in accrued interest on the repurchased portion of the Exchangeable Notes. The Company wrote off $ 926 of debt issuance costs in connection with the repurchase transactions. These repurchases resulted in a decrease in the Company's total leverage ratio, and following the completion of the repurchases of these Exchangeable Notes, approximately $ 26,223 in aggregate principal amount of the Exchangeable Notes remained outstanding, with terms unchanged. The Company recorded a gain on retirement of debt of $ 2,397 due to the estimated acquisition price exceeding the net carrying amount of the repurchased portion of the Exchangeable Notes, adjusted for unamortized debt issuance costs and costs and third-party fees related to the transaction. Upon maturity of the Exchangeable Notes in February 2025, we paid $ 26,223 for the remaining principal balance and $ 131 in accrued interest. Exchangeable Note Hedge Transactions On February 12, 2020, concurrently with the pricing of the Exchangeable Notes, and on February 13, 2020, concurrently with the exercise by the initial purchasers of their right to purchase additional Exchangeable Notes, i3 Verticals, LLC entered into exchangeable note hedge transactions with respect to Class A common stock (the “Note Hedge Transactions”) with certain financial institutions (collectively, the “Counterparties”). The Note Hedge Transactions covered, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes, the same number of shares of Class A common stock that initially underlaid the Exchangeable Notes in the aggregate and were exercisable upon exchange of the Exchangeable Notes. The Note Hedge Transactions were intended to reduce potential dilution to the Class A common stock upon any exchange of the Exchangeable Notes. The Note Hedge Transactions expired upon the maturity of the Exchangeable Notes. The Note Hedge Transactions were separate transactions, entered into by i3 Verticals, LLC 24 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) with the Counterparties, and were not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes did not have any rights with respect to the Note Hedge Transactions. i3 Verticals, LLC used approximately $ 28,676 of the net proceeds from the offering of the Exchangeable Notes (net of the premiums received for the warrant transactions described below) to pay the cost of the Note Hedge Transactions. The Note Hedge Transactions did not require separate accounting as a derivative as they meet a scope exception for certain contracts involving an entity's own equity. The premiums paid for the Note Hedge Transactions have been included as a net reduction to additional paid-in capital within stockholders' equity. In December 2023, i3 Verticals, LLC received $ 250 from the Counterparties to terminate the portion of the Note Hedge Transactions corresponding to the Exchangeable Notes that were repurchased in fiscal year 2020. Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Note Hedge Transactions corresponding to the Exchangeable Note Repurchases. On January 18, 2024, in connection with the Exchangeable Note Repurchases, the Company and i3 Verticals, LLC terminated the corresponding portions of the Note Hedge Transactions ("Note Hedge Unwinds"), and i3 Verticals, LLC received $ 987 for the sale of the Note Hedge Unwinds and recorded a loss on the sale of the Note Hedge Unwinds of $ 245 . The Note Hedge Transactions expired in February 2025 upon the maturity and payment in full of the Exchangeable Notes. Warrant Transactions On February 12, 2020, concurrently with the pricing of the Exchangeable Notes, and on February 13, 2020, concurrently with the exercise by the initial purchasers of their right to purchase additional Exchangeable Notes, the Company entered into warrant transactions to sell to the Counterparties warrants (the “Warrants”) to acquire, subject to customary adjustments, up to initially 3,376,391 shares of Class A common stock in the aggregate at an initial exercise price of $ 62.88 per share. The Company offered and sold the Warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Warrants expired over a ninety trading day period that began on May 15, 2025. The Warrants are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes did not have any rights with respect to the Warrants. The Company received approximately $ 14,669 from the offering and sale of the Warrants. The Warrants do not require separate accounting as a derivative as they meet a scope exception for certain contracts involving an entity's own equity. The premiums paid for the Warrants have been included as a net increase to additional paid-in capital within stockholders' equity. In December 2023, the Company paid $ 119 to the Counterparties to terminate the portion of the Warrants corresponding to the Exchangeable Notes that were repurchased in fiscal year 2020. Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Warrants corresponding to the Exchangeable Note Repurchases. On January 18, 2024, in connection with the Exchangeable Note Repurchases, the Company and i3 Verticals, LLC terminated the corresponding portions of the Warrants ("Warrant Unwinds"), and the Company paid $ 433 for the repurchase of the Warrant Unwinds and recorded a gain on the repurchase of the Warrant Unwinds of $ 105 . 2023 Senior Secured Credit Facility On May 8, 2023, i3 Verticals, LLC (the “Borrower”), entered into that certain Credit Agreement (as amended, the “2023 Senior Secured Credit Facility”) with the guarantors and lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan”). The 2023 Senior Secured Credit Facility replaced the prior senior secured credit facility of the Company which was entered into on May 9, 2019 (the "Prior Senior Secured Credit Facility"). Following an amendment to the Credit Facility entered into on May 5, 2025, as described below, 25 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) the 2023 Senior Secured Credit Facility provides for aggregate commitments of $ 400,000 in the form of a senior secured revolving credit facility (the “Revolver”). The 2023 Senior Secured Credit Facility provides that the Borrower has the right to seek additional commitments to provide additional term loan facilities or additional revolving credit commitments in an aggregate principal amount up to, as of any date of determination, the sum of (i) the greater of $ 100,000 and 100 % of the Borrower’s consolidated EBITDA (as defined in the 2023 Senior Secured Credit Facility) for the most recently completed four quarter period, plus (ii) the amount of certain prepayments of certain indebtedness, so long as, among other things, after giving pro forma effect to the incurrence of such additional borrowings and any related transactions, the Borrower’s consolidated interest coverage ratio (as defined in the 2023 Senior Secured Credit Facility) would not be less than 3.0 to 1.0 and the Borrower’s consolidated total net leverage ratio (as defined in the 2023 Senior Secured Credit Facility) would not exceed 5.0 to 1.0. As of December 31, 2025, the Borrower's consolidated interest coverage ratio was 94.9 x and total leverage ratio was 0.0 x. The provision of any such additional amounts under the additional term loan facilities or additional revolving credit commitments are subject to certain additional conditions and the receipt of certain additional commitments by existing or additional lenders. The lenders under the 2023 Senior Secured Credit Facility are not under any obligation to provide any such additional term loan facilities or revolving credit commitments. The proceeds of the Revolver, together with proceeds from any additional amounts under the additional term loan facilities or additional revolving credit commitments, may only be used by the Borrower to (i) finance working capital, capital expenditures and other lawful corporate purposes, (ii) finance permitted acquisitions (as defined in the 2023 Senior Secured Credit Facility) and (iii) to refinance certain existing indebtedness. Borrowings under the Revolver will be made, at the Borrower’s option, at the Adjusted Term SOFR rate or the base rate, plus, in each case, an applicable margin. The Adjusted Term SOFR rate will be the rate of interest per annum equal to the Term SOFR rate (based upon an interest period of one, three or six months), plus 0.10 %, plus an applicable margin of 2.00 % to 3.00 % ( 2.00 % at December 31, 2025). The Adjusted Term SOFR rate shall not be less than 0 % in any event. The base rate is a fluctuating rate of interest per annum equal to the highest of (a) the greater of the federal funds rate or the overnight bank funding rate, plus ½ of 1%, (b) Wall Street Journal prime rate and (c) the Adjusted Term SOFR rate for an interest period of one month, plus 1 %, plus an applicable margin of 1.00 % to 2.00 % ( 1.00 % at December 31, 2025). The base rate shall not be less than 1 % in any event. 26 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The applicable margin is based upon the Borrower’s consolidated total net leverage ratio (as defined in the 2023 Senior Secured Credit Facility), as reflected in the schedule below: Consolidated Total Net Leverage Ratio Commitment Fee Letter of Credit Fee Term Benchmark Loans Base Rate Loans > 3.0 to 1.0 0.30 % 3.00 % 3.00 % 2.00 % > 2.5 to 1.0 but < 3.00 to 1.0 0.25 % 2.50 % 2.50 % 1.50 % > 2.0 to 1.0 but < 2.50 to 1.0 0.20 % 2.25 % 2.25 % 1.25 % < 2.0 to 1.0 0.15 % 2.00 % 2.00 % 1.00 % In addition to paying interest on outstanding principal under the Revolver, the Borrower will be required to pay a commitment fee equal to the product of between 0.15 % and 0.30 % (the applicable percentage depending on the Borrower’s consolidated total net leverage ratio as reflected in the schedule above, 0.15 % at December 31, 2025) times the actual daily amount by which $ 400,000 exceeds the total amount outstanding under the Revolver and available to be drawn under all outstanding letters of credit. The Borrower will be permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the 2023 Senior Secured Credit Facility, whether such amounts are issued under the Revolver or under the additional term loan facilities or additional revolving credit facilities, at any time without premium or penalty. In addition, if the total amount borrowed under the Revolver exceeds $ 400,000 at any time, the 2023 Senior Secured Credit Facility requires the Borrower to prepay such excess outstanding amounts. All obligations under the 2023 Senior Secured Credit Facility are unconditionally guaranteed by the Company, and each of the Company’s existing and future direct and indirect material, wholly owned domestic subsidiaries, subject to certain exceptions. The obligations are secured by first-priority security interests in substantially all tangible and intangible assets of the Borrower, the Company and each subsidiary guarantor, in each case whether owned on the date of the initial borrowings or thereafter acquired. The 2023 Senior Secured Credit Facility places certain restrictions on the ability of the Borrower, the Company and their subsidiaries to, among other things, incur debt and liens; merge, consolidate or liquidate; dispose of assets; enter into hedging arrangements; make certain restricted payments; undertake transactions with affiliates; enter into sale-leaseback transactions; make certain investments; prepay or modify the terms of certain indebtedness; and modify the terms of certain organizational agreements. The 2023 Senior Secured Credit Facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain events with respect to employee benefit plans, invalidity of loan documents and certain changes in control. On May 5, 2025, i3 LLC entered into that certain Second Amendment to Credit Agreement (the “Amendment”), which amended the 2023 Senior Secured Credit Facility, with the guarantors and the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The Amendment provided for certain amendments to the 2023 Senior Secured Credit Facility, including amendments that permitted and accommodated the execution of the Healthcare RCM Purchase Agreement and the consummation of the Healthcare RCM Transactions. The Amendment also permanently reduced the aggregate lender commitments under the Company’s revolving line of credit from $ 450,000 to $ 400,000 . 27 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Debt issuance costs The Company did not incur any debt issuance costs during the three months ended December 31, 2025 and 2024. The Company's debt issuance costs are being amortized over the related term of the debt using the straight-line method, which is not materially different than the effective interest rate method, and are presented within other assets in the condensed consolidated balance sheets. The amortization of deferred debt issuance costs is included in interest expense and amounted to approximately $ 216 during the three months ended December 31, 2025 and $ 280 during the three months ended December 31, 2024. 9. STOCKHOLDERS' EQUITY Share Repurchase Program On August 7, 2025, the Company announced that our Board of Directors had approved a share repurchase program (the "August 2025 Share Repurchase Program") for the Company's Class A common stock, under which the Company was authorized to repurchase up to $ 50,000 of outstanding shares of Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases). This August 2025 Share Repurchase Program replaced a prior share repurchase program entered into by the Company on August 8, 2024 (the “August 2024 Share Repurchase Program”), under which the Company was authorized to repurchase up to $ 50,000 of outstanding shares of the Company’s Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases), which the August 2024 Share Repurchase Program terminated on August 8, 2025. During the three months ended December 31, 2024 the Company repurchased 496,785 shares of Class A Common Stock under the August 2024 Share Repurchase Program at an average price of $ 22.49 per share for a total cost of $ 11,190 . The repurchased shares were cancelled and retired, resulting in a permanent reduction in both the number of shares outstanding and the Company's total stockholders' equity. The terms of August 2025 Share Repurchase Program provided that such program would terminate on the earlier of September 30, 2026, or when the maximum dollar amount under the authorization was expended. Pursuant to the August 2025 Share Repurchase Program, the Company was authorized to make repurchases of its Class A Common Stock in the open market, through privately negotiated transactions, or otherwise, including under Rule 10b5-1 plans. During the three months ended December 31, 2025 the Company repurchased 1,522,838 shares of Class A Common Stock under the August 2025 Share Repurchase Program at an average price of $ 24.88 per share for a total cost inclusive of commissions and excise taxes of $ 38,317 . The repurchased shares were cancelled and retired, resulting in a permanent reduction in both the number of shares outstanding and the Company's total stockholders' equity. As of December 31, 2025 the remaining total available authorization under the August 2025 Share Repurchase Program was $ 12,108 . Since December 31, 2025, the maximum dollar amount under the August 2025 Share Repurchase Program has been expended, and the August 2025 Share Repurchase Program is no longer in effect. On February 5, 2026, the Company entered into a new share repurchase program. For additional information regarding the Company’s new share purchase program, see Note 20. When the Company repurchases shares of Common Stock, the amount paid to repurchase the shares in excess of the par or stated value is allocated to additional paid-in-capital unless subject to limitation or the balance in additional paid-in-capital is exhausted. Remaining amounts are recognized as a reduction in retained earnings. 28 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 10. INCOME TAXES i3 Verticals, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from i3 Verticals, LLC based on i3 Verticals, Inc.’s economic interest in i3 Verticals, LLC. i3 Verticals, LLC's members, including the Company, are liable for federal, state and local income taxes based on their share of i3 Verticals, LLC's pass-through taxable income. i3 Verticals, LLC is not a taxable entity for federal income tax purposes but is subject to and reports entity level tax in both Tennessee and Texas. In addition, certain subsidiaries of i3 Verticals, LLC are corporations that are subject to state and federal income taxes. On July 4, 2025, the U.S. enacted the tax legislation known as the One Big Beautiful Bill Act which includes, among other provisions, changes to federal income tax provisions including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provision within the Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions effective in 2025 and others taking effect in later years. The Company is evaluating the future impact of these changes on its condensed consolidated financial statements. The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. When the estimate of the annual effective tax rate is unreliable, the Company records its income tax expense or benefit based upon a period to date effective tax rate. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the Company’s estimated tax rate changes, it makes a cumulative adjustment in that period. The Company’s provision for income taxes for continuing operations was a provision of $ 704 and a provision of $ 409 for the three months ended December 31, 2025 and 2024, respectively. Tax Receivable Agreement On June 25, 2018, the Company entered into a Tax Receivable Agreement with i3 Verticals, LLC and each of the Continuing Equity Owners (the “Tax Receivable Agreement”) that provides for the payment by the Company to the Continuing Equity Owners of 85 % of the amount of certain tax benefits, if any, that it actually realizes, or in some circumstances, is deemed to realize in its tax reporting, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of Common Units of i3 Verticals, LLC for Class A common stock of i3 Verticals, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. These tax benefit payments are not conditioned upon one or more of the Continuing Equity Owners maintaining a continued ownership interest in i3 Verticals, LLC. If a Continuing Equity Owner transfers Common Units but does not assign to the transferee of such units its rights under the Tax Receivable Agreement, such Continuing Equity Owner generally will continue to be entitled to receive payments under the Tax Receivable Agreement arising in respect of a subsequent exchange of such Common Units. In general, the Continuing Equity Owners’ rights under the Tax Receivable Agreement may not be assigned, sold, pledged or otherwise alienated to any person, other than certain permitted transferees, without (a) the Company's prior written consent, which may not be unreasonably withheld, conditioned or delayed, and (b) such persons becoming a party to the Tax Receivable Agreement and agreeing to succeed to the applicable Continuing Equity Owner’s interest therein. The Company expects to benefit from the remaining 15 % of the tax benefits, if any, that the Company may realize. During the three months ended December 31, 2025, the Company did not acquire any common units of i3 Verticals, LLC in connection with the redemption of common units. The deferred tax asset balance was $ 37,094 as of December 31, 2025. The Company also has a corresponding Tax Receivable Agreement liability of $ 34,911 , of which $ 2,525 was recorded in accrued expenses and other current liabilities and $ 32,386 was recorded in long-term tax receivable agreement obligations as of December 31, 2025. Payments to the Continuing Equity Owners related to exchanges through December 31, 2025 will range from $ 0 to $ 5,364 per year and are expected to be paid over the next 22 years. The amounts recorded as of December 29 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 31, 2025, approximate the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S. federal and state income tax returns. Future payments under the Tax Receivable Agreement with respect to subsequent exchanges would be in addition to these amounts. 11. LEASES The Company’s leases consist primarily of real estate leases throughout the markets in which the Company operates. At contract inception, the Company determines whether an arrangement is or contains a lease, and for each identified lease, evaluates the classification as operating or financing. The Company had no finance leases as of December 31, 2025. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The weighted-average remaining lease term at December 31, 2025 and 2024 were 3 years. and 4 years, respectively. The Company had no significant short-term leases during the three months ended December 31, 2025 and 2024. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rates were determined based on a portfolio approach considering the Company’s current secured borrowing rate adjusted for market conditions and the length of the lease term. The weighted-average discount rate used in the measurement of our lease liabilities was 6.1 % and 7.1 % as of December 31, 2025 and 2024, respectively. Operating lease cost is recognized on a straight-line basis over the lease term. Operating lease costs from continuing operations were $ 619 and $ 688 for the three months ended December 31, 2025 and 2024, respectively, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations. Total variable lease costs within operating lease costs from continuing operations were not significant for the three months ended December 31, 2025 and 2024. The variable lease costs are primarily comprised of costs of maintenance and utilities and changes in rates, and are determined based on the actual costs incurred during the period. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities. Short-term rent expense from continuing operations were not significant for the three months ended December 31, 2025 and 2024. Short-term rent expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations. 30 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) As of December 31, 2025, maturities of lease liabilities for continuing operations are as follows: Fiscal Years ending September 30: 2026 (nine months remaining) $ 1,554 2027 1,537 2028 754 2029 597 2030 515 Thereafter 105 Total future minimum lease payments (undiscounted) (1) 5,062 Less: present value discount ( 465 ) Present value of lease liability $ 4,597 __________________________ 1. Total future minimum lease payments excludes payments of $ 67 for leases designated as short-term leases, which are excluded from the Company's right-of-use assets. These payments will be made within the next twelve months. 12. FAIR VALUE MEASUREMENTS The Company applies the provisions of ASC 820, Fair Value Measurement , which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A three-tier, fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The three levels are: Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets. The carrying value of the Company’s financial instruments, including cash and cash equivalents, restricted cash, settlement assets and obligations, accounts receivable, other assets, accounts payable, and accrued expenses, approximated their fair values as of December 31, 2025 and 2024, because of the relatively short maturity dates on these instruments. The carrying amount of debt approximates fair value as of December 31, 2025 and 2024, because interest rates on these instruments approximate market interest rates. 31 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Company has no Level 1 or Level 2 financial instruments measured at fair value on a recurring basis. The following tables present the changes in the Company's Level 3 financial instruments that are measured at fair value on a recurring basis. Accrued Contingent Consideration Balance at September 30, 2025 $ 3,571 Contingent consideration accrued at time of business combination — Change in fair value of contingent consideration included in operating expenses ( 374 ) Contingent consideration paid — Balance at December 31, 2025 $ 3,197 Accrued Contingent Consideration Balance at September 30, 2024 (1) $ 2,154 Contingent consideration accrued at time of business combination — Change in fair value of contingent consideration included in operating expenses 1,252 Contingent consideration paid ( 60 ) Balance at December 31, 2024 (2) $ 3,346 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 198 of the Company's accrued contingent consideration (as of September 30, 2024) were classified as "Current liabilities held for sale" in the accompanying condensed consolidated balance sheets and were not included in these amounts. 2. In connection with the sale of the Healthcare RCM Business, $ 323 of the Company's accrued contingent consideration was classified as "Current assets held for sale" and December 31, 2024 in the accompanying condensed consolidated balance sheets and was not included in this amount. The fair value of contingent consideration obligations includes inputs not observable in the market and thus represents a Level 3 measurement. The amount to be paid under these obligations is contingent upon the achievement of certain growth metrics related to the financial performance of the entities subsequent to acquisition. The fair value of material contingent consideration included in an acquisition is calculated using a Monte Carlo simulation as well as a discounted cash flows analysis. The contingent consideration is revalued each period until it is settled. Management reviews the historical and projected performance of each acquisition with contingent consideration and uses an income probability method to revalue the contingent consideration. The revaluation requires management to make certain assumptions and represent management's best estimate at the valuation date. The probabilities are determined based on a management review of the expected likelihood of triggering events that would cause a change in the contingent consideration paid. The Company develops the projected future financial results based on an analysis of historical results, market conditions, and the expected impact of anticipated changes in the Company's overall business and/or product strategies. Approximately $ 1,943 and $ 82 of contingent consideration was recorded in accrued expenses and other current liabilities as of December 31, 2025 and September 30, 2025, respectively. Approximately $ 1,254 and $ 3,489 of contingent consideration was recorded in other long-term liabilities as of December 31, 2025 and September 30, 2025, respectively. 32 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 13. EQUITY-BASED COMPENSATION A summary of equity-based compensation expense for continuing operations recognized during the three months ended December 31, 2025 and 2024 is as follows: Three Months Ended December 31, 2025 2024 Stock options $ 1,346 $ 2,323 Restricted stock units 3,832 1,283 Equity-based compensation expense $ 5,178 $ 3,606 In connection with the sale of the Healthcare RCM Business, $ 208 of the Company's equity-based compensation expense was classified within "net income from discontinued operations" in the accompanying condensed consolidated statements of operations during three months ended December 31, 2024. Amounts are included in other costs of services and in selling, general and administrative expense on the condensed consolidated statements of operations. Current and deferred income tax benefits for continuing operations of $ 730 and $ 577 were recognized during the three months ended December 31, 2025 and 2024, respectively. Stock Options In May 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) under which the Company may grant up to 3,500,000 stock options and other equity-based awards to employees, directors and officers. The number of shares of Class A common stock available for issuance under the 2018 Plan includes an annual increase on the first day of each calendar year equal to 4.0 % of the outstanding shares of all classes of the Company's common stock as of the last day of the immediately preceding calendar year, unless the Company’s board of directors determines prior to the last trading day of December of the immediately preceding calendar year that the increase shall be less than 4.0 %. As of December 31, 2025, equity awards with respect to 2,276,394 shares of the Company's Class A common stock were available for grant under the 2018 Plan. In September 2020, the Company adopted the 2020 Acquisition Equity Incentive Plan (the “2020 Inducement Plan”) under which the Company may grant up to 1,500,000 stock options and other equity-based awards to individuals that were not previously employees of the Company or its subsidiaries in connection with acquisitions, as a material inducement to the individual's entry into employment with the Company or its subsidiaries within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. In May 2021, the Company amended the 2020 Inducement Plan to increase the number of shares of the Company's Class A common stock available for issuance from 1,500,000 to 3,000,000 shares. As of December 31, 2025, equity awards with respect to 2,001,344 shares of the Company's Class A common stock were available for grant under the 2020 Inducement Plan. Share-based compensation expense includes the estimated effects of forfeitures, which will be adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates. 33 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) A summary of stock option activity for the three months ended December 31, 2025 is as follows: Stock Options Weighted Average Exercise Price Outstanding at September 30, 2025 7,881,236 $ 24.61 Granted — — Exercised ( 141,524 ) 25.64 Forfeited and cancelled ( 42,948 ) 24.80 Outstanding at December 31, 2025 7,696,764 $ 24.59 Exercisable at December 31, 2025 6,554,770 $ 25.06 There were no stock options granted during the three months ended December 31, 2025. As of December 31, 2025, there were 7,696,764 stock options outstanding, of which 6,554,770 were exercisable. As of December 31, 2025, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $ 8,724 , which is expected to be recognized over a weighted-average period of 2.0 years. The total fair value of stock options that vested during the three months ended December 31, 2025 was $ 674 . Restricted Stock Units The Company has issued Class A common stock in the form of restricted stock units ("RSUs") under the 2018 Plan. A summary of activity related to restricted stock units for the three months ended December 31, 2025 is as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding at September 30, 2025 1,160,641 $ 24.89 Granted 359,850 24.32 Vested ( 184,108 ) 23.05 Forfeited and cancelled ( 22,482 ) 23.96 Outstanding at December 31, 2025 1,313,901 $ 25.00 The weighted-average grant date fair value of RSUs granted during three months ended December 31, 2025 was $ 24.32 . As of December 31, 2025, total unrecognized compensation expense related to unvested RSUs, including an estimate for pre-vesting forfeitures, was $ 22,779 , which is expected to be recognized over a weighted average period of 2.9 years. The total fair value of RSUs that vested during the three months ended December 31, 2025 was $ 4,244 . 34 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 14. COMMITMENTS AND CONTINGENCIES Leases The Company utilizes office space and equipment under operating leases. Rent expense from continuing operations under these leases amounted to $ 702 and $ 712 during the three months ended December 31, 2025 and 2024, respectively. Refer to Note 11 for further discussion and a table of the future minimum payments under these leases. Contract Commitments We have contractual obligations primarily for third-party technology services and licenses. Certain agreements are fixed for the duration of the contracts and may require us to pay minimum fees. As of December 31, 2025, the remaining aggregate minimum contractual commitment under these arrangements was approximately $ 16,972 , which exclude contract commitments that have been prepaid. Future minimum payments, including contracts with a remaining term of less than one year, based on these contractual agreements are as follows: Fiscal Years ending September 30: 2026 (nine months remaining) $ 6,935 2027 7,366 2028 1,713 2029 517 2030 242 Thereafter 199 Total $ 16,972 Litigation With respect to all legal, regulatory and governmental proceedings, and in accordance with ASC 450-20, Contingencies—Loss Contingencies , the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, the Company records an accrual for the estimated amount of loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and the Company is able to determine an estimate of the amount of possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, the Company discloses the estimate of the amount of possible loss or range of loss. However, the Company in some instances may be unable to estimate an amount of possible loss or range of loss based on the significant uncertainties involved in, or the preliminary nature of, any such material matter, and in these instances the Company will disclose the nature of the contingency and describe why the Company is unable to determine an estimate of possible loss or range of loss. The Company is involved in ordinary course legal proceedings, which include all claims, lawsuits, investigations and proceedings, including unasserted claims, which are probable of being asserted, arising in the ordinary course of business. The Company has considered all such ordinary course legal proceedings in formulating its disclosures and assessments. After taking into consideration the evaluation of such legal matters by the Company's legal counsel, the Company's management believes at this time such matters will not have a material impact on the Company's consolidated balance sheet, results of operations or cash flows. PaySchools Litigation On May 16, 2025, Suzanne Hess, individually and on behalf of a putative class of citizens of the State of New York, filed a Class Action Complaint and Demand for Jury Trial (the “Complaint”), in the Supreme Court of the State of New York, Nassau County, against i3 Verticals, LLC and CP-DBS, LLC d/b/a “PaySchools”, a subsidiary 35 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) of i3 Verticals, LLC. The claimed damages relate to services offered by PaySchools that enable parents, guardians and caregivers to fund lunches for students in certain New York school districts, and allegedly unlawful practices by PaySchools related to the fees charged for these school lunch services. The plaintiff seeks unspecified monetary damages, restitution, disgorgement, and attorneys’ fees and costs, as well as injunctive relief prohibiting PaySchools from charging transaction-based fees. On June 20, 2025, the matter was removed to the United States District Court for the Eastern District of New York, where a motion to dismiss the Complaint, filed by PaySchools, is pending. The Company is unable to predict the outcome of this litigation. While the Company does not believe that this matter will have a material adverse effect on its business or financial condition, the Company cannot give assurance that this matter will not have a material effect on its results of operations or cash flows for any particular reporting period. S&S Litigation On June 2, 2021, the State of Louisiana, Division of Administration (the “State”) and a putative class of Louisiana sheriffs ("Sheriffs") and law enforcement districts ("Districts") (collectively "Plaintiffs") filed a Petition (as amended on October 4, 2021, the “Petition”), in the 19 th Judicial District Court for the Parish of East Baton Rouge against i3-Software & Services, LLC (“S&S”), a subsidiary of the Company located in Shreveport, Louisiana, the Company, i3 Verticals, LLC, the current leader of the S&S business, the former leader of the S&S business, and 1120 South Pointe Properties, LLC (“South Pointe”), the former owner of the assets of the S&S business (collectively "Defendants") . See State of Louisiana, by and through its Division of Administration, East Baton Rouge Parish Law Enforcement District, by and through the duly elected East Baton Rouge Parish Sheriff, Sid J. Gautreaux, III, et. al., individually and as class representatives vs. i3-Software & Services, LLC; 1120 South Pointe Properties, LLC, formerly known as Software and Services of Louisiana, L.L.C.; i3 Verticals, Inc.; i3 Verticals, LLC; Gregory R. Teeters; and Scott Carrington . The Petition was amended on October 4, 2021 to amend and expand the putative class and subsequently removed to federal court. The Petition seeks monetary damages for the cost of network remediation of $ 15,000 purportedly spent by the State and $ 7,000 purportedly spent by the Sheriffs and Districts, return of purchase prices, potential additional expenses related to remediation and any obligation to notify parties of an alleged data breach as and if required by applicable law, and reasonable attorneys’ fees. The claimed damages relate to a third-party remote access software product used in connection with services provided by S&S to certain Louisiana law enforcement districts and alleged inadequacies in the Company’s cybersecurity practices. On February 22, 2024, the case was remanded to the 19th Judicial District Court for the Parish of East Baton Rouge, where the case remains pending. All Defendants filed pleading-stage motions to dismiss, some of which were granted. The Court allowed plaintiffs to re-plead certain claims and has severed the claims brought by the Division of Administration from the claims brought by the parish Sheriffs and Districts. The State chose not to re-plead their claims, which leaves some of their claims now dismissed with prejudice. The Sheriffs and Districts re-plead their claims. Certain Defendants filed renewed pleading-stage motions to dismiss that the Court denied on April 14, 2025. The case is now in the discovery phase. Class certification fact and expert discovery, including third-party subpoenas and motion practice, is also underway, and the Court has scheduled a March 31, 2026 hearing principally on the issue of class certification. The assets of the S&S business were acquired from South Pointe by the Company in 2018 for $ 17,000 , including upfront cash consideration and contingent consideration, and provides software and payments services to local government agencies almost exclusively in Louisiana. The Company is unable to predict the outcome of this litigation. While the Company does not believe that this matter will have a material adverse effect on its business or financial condition, the Company cannot give 36 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) assurance that this matter will not have a material effect on its results of operations or cash flows for any particular reporting period. 15. RELATED PARTY TRANSACTIONS In connection with the Company’s IPO, the Company and i3 Verticals, LLC entered into a Tax Receivable Agreement with the Continuing Equity Owners that provides for the payment by the Company to the Continuing Equity Owners of 85 % of the amount of certain tax benefits, if any, that it actually realizes, or in some circumstances, is deemed to realize in its tax reporting, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of Common Units of i3 Verticals, LLC for Class A common stock of i3 Verticals, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. See Note 10 for further information. As of December 31, 2025, the total amount due under the Tax Receivable Agreement was $ 34,911 . On January 23, 2025, the Company and i3 Verticals, LLC effected certain recapitalization actions in order to reduce excess cash held at the Company as a result of its “Up-C” structure following a tax distribution received by the Company and the Continuing Equity Owners earlier in January 2025 (the “LLC Tax Distribution”) related to the taxable income associated with the gain on the sale of the Merchant Services Business completed in September 2024 that was anticipated to be recognized for 2024 federal income tax purposes by members of the Company. As a result of differences in the amount of net taxable income allocable to the Company and to the Continuing Equity Owners and the higher assumed tax rate of the Continuing Equity Owners than the tax rate of the Company, this LLC Tax Distribution resulted in the Company holding cash in excess of the Company’s tax liabilities, its obligation to make payments under its the Tax Receivable Agreement, and any other expected liabilities of the Company. Accordingly, in order to make such cash held by the Company accessible in connection with our operations, on January 23, 2025, the Company contributed approximately $ 21,396 in cash (the “Capital Contribution”) held by the Company to i3 LLC in exchange for 896,763 newly-issued common units of i3 Verticals, LLC (“Common Units”) at a price per Common Unit of $ 23.86 , such price being equal to the to the 50 -day volume-weighted average price of the Company’s Class A common stock for the period ended January 22, 2025. Immediately following the Capital Contribution, the Common Units were recapitalized through a reverse unit split of the Common Units at a ratio of approximately 0.9631 to 1 (the “Reverse Unit Split”) which caused the number of Common Units held by the Company immediately following the Reverse Unit Split to equal to the number of Common Units held by the Company immediately prior to the Contribution, thereby maintaining a one -to-one ratio between the number of Common Units owned by the Company and the number of outstanding shares of Class A Common Stock. Upon the effectiveness of the Reverse Unit Split, 369,256 outstanding shares of Class B common stock of the Company were retired without consideration, thereby maintaining a one -to-one ratio between the number of Common Units owned by the Continuing Equity Owners after giving to the Reverse Unit Split and the number of outstanding shares of Class B Common Stock. After giving effect to these recapitalization actions, as of January 23, 2025, the Company held approximately 70.83 % of the outstanding Common Units (an increase of approximately 0.78 % compared to the Company’s ownership of approximately 70.05 % of the outstanding Common Units immediately prior to giving effect to these recapitalization actions) and the Continuing Equity Owners hold approximately 29.17 % of the outstanding Common Units (a decrease of approximately 0.78 % compared to the Continuing Equity Owners’ ownership of approximately 29.95 % of the outstanding Common Units immediately prior to giving effect to these recapitalization actions). 37 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 16. SEGMENTS REPORTING The Company determines its operating segments based on ASC 280, Segment Reporting , in alignment with how the CODM monitors and manages the performance of the business as well as the level at which financial information is reviewed. The accounting policies of the Company’s one reportable segment are the same as those described in the summary of significant accounting policies in Note 3. The Company's core business for continuing operations is providing mission-critical enterprise software solutions to its public sector customers. The Company determined that it had one operating segment and one reportable segment. This is consistent with how the chief operating decision maker ("CODM"), the Company's Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance (which is based on consolidated information) as further noted below. The Company's business has products and solutions that create an efficient flow of information. The Company's public sector software solutions help its customers provide more responsive and efficient services to their citizens and stakeholders. The Company's revenue is primarily derived from enterprise software solutions, which can include SaaS, transaction-based fees, ongoing software maintenance and support, software licenses, and other professional services related to the Company's software offerings. Additional revenue is derived from enabling payments within the Company's software platforms. As the Company has a single operating segment and single reportable segment and is managed on a consolidated basis, the measure of segment profit or loss that the CODM uses to allocate resources and assess performance is consolidated net income as reported in the condensed consolidated statements of operations. The CODM uses this key measure to evaluate operating performance and considers budget-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources to the segment. 38 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following is a summary of reportable segment operating performance and significant expenses, reconciled to the Company's consolidated net income for continuing operations for the three months ended December 31, 2025 and 2024: Three Months Ended December 31, 2025 2024 Revenue $ 52,671 $ 52,221 Less: Other costs of services (excluding depreciation and amortization) 17,345 15,414 People operating expenses 15,272 15,274 Technology operating expenses 2,115 2,548 Other operating expenses (1) 4,324 4,414 Other segment expenses (2) 12,530 11,781 Net income from continuing operations $ 1,085 $ 2,790 ____________________ 1. Other operating expenses includes rent expense, travel and entertainment, office expense, professional services expense, advertising and trade shows expense and immaterial miscellaneous other operating expenses. 2. Other segment expenses includes stock compensation expense, M&A-related expenses, other taxes and one-time expenses, depreciation and amortization, change in fair value of contingent consideration, interest expense, other (income) expense, and income tax expense. Revenues from external customers are attributed to geographic areas based on the location of the customer. For the three months ended December 31, 2025 and 2024, the majority of the Company’s revenues were derived from customers located in the United States, the Company’s country of domicile. Revenues from foreign countries, primarily Canada, were not considered significant for separate disclosure. The basis for attributing revenues to geographic areas is the location of the customer receiving the goods or services. The Company has not disclosed expenditures on long-lived assets as such expenditures are not reviewed by or provided to the chief operating decision maker. The measure of segment assets is reported on the balance sheet as total consolidated assets. 17. NON-CONTROLLING INTEREST i3 Verticals, Inc. is the sole managing member of i3 Verticals, LLC, and as a result, consolidates the financial results of i3 Verticals, LLC and reports a non-controlling interest representing the Common Units of i3 Verticals, LLC held by the Continuing Equity Owners. Changes in i3 Verticals, Inc.’s ownership interest in i3 Verticals, LLC while i3 Verticals, Inc. retains its controlling interest in i3 Verticals, LLC will be accounted for as equity transactions. As such, future redemptions or direct exchanges of Common Units of i3 Verticals, LLC by the Continuing Equity Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when i3 Verticals, LLC has positive or negative net assets, respectively. As of December 31, 2025 and 2024, respectively, i3 Verticals, Inc. owned 22,609,537 and 23,437,250 of i3 Verticals, LLC's Common Units, representing a 73.0 % and 70.1 % economic ownership interest in i3 Verticals, LLC. 39 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following table summarizes the impact on equity due to changes in the Company's ownership interest in i3 Verticals, LLC: Three Months Ended December 31, 2025 2024 Net income attributable to non-controlling interest $ 463 $ 1,052 Transfers from non-controlling interests: Distributions to non-controlling interest holders 93 — Redemption of common units in i3 Verticals, LLC — ( 237 ) Allocation of equity from non-controlling interests ( 3,861 ) ( 293 ) Net transfers from non-controlling interests ( 3,768 ) ( 530 ) Change from net income attributable to non-controlling interests and net transfers (from) to non-controlling interests $ ( 3,305 ) $ 522 18. EARNINGS PER SHARE Basic earnings per share of Class A common stock is computed by dividing net income available to i3 Verticals, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income available to i3 Verticals, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. 40 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock from continuing operations for the three months ended December 31, 2025 and 2024: Three Months Ended December 31, 2025 2024 Basic net income per share: Numerator Net income $ 1,085 $ 2,790 Less: Net income attributable to non-controlling interest 509 935 Net income attributable to Class A common stockholders $ 576 $ 1,855 Denominator Weighted average shares of Class A common stock outstanding 23,675,075 23,551,352 Basic net income per share $ 0.02 $ 0.08 Diluted net income per share: Numerator Net income attributable to Class A common stockholders $ 576 $ 1,855 Reallocation of net income assuming conversion of common units (1)(2) — 711 Net income attributable to Class A common stockholders – diluted $ 576 $ 2,566 Denominator Weighted average shares of Class A common stock outstanding 23,675,075 23,551,352 Weighted average effect of dilutive securities (2) 1,416,679 10,505,844 Weighted average shares of Class A common stock outstanding – diluted 25,091,754 34,057,196 Diluted net income per share $ 0.02 $ 0.08 __________________________ 1. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the period. 2. For the three months ended December 31, 2025 and 2024, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net income per share of Class A common stock for continuing operations: a. 8,381,681 weighted average shares of Class B common stock for the three months ended December 31, 2025, along with the reallocation of associated net income assuming conversion of these shares (which represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period), were excluded because the effect would have been anti-dilutive and b. 2,051,755 and 6,236,721 stock options for the three months ended December 31, 2025 and 2024, respectively, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, 41 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock from discontinued operations for the three months ended December 31, 2025 and 2024: Three Months Ended December 31, 2025 2024 Basic net (loss) income per share: Numerator Net (loss) income $ ( 138 ) $ 318 Less: Net (loss) income attributable to non-controlling interest ( 46 ) 117 Net (loss) income attributable to Class A common stockholders $ ( 92 ) $ 201 Denominator Weighted average shares of Class A common stock outstanding 23,675,075 23,551,352 Basic net (loss) income per share $ 0.00 $ 0.01 Diluted net (loss) income per share: Numerator Net (loss) income attributable to Class A common stockholders $ ( 92 ) $ 201 Reallocation of net loss assuming conversion of common units (1)(2) ( 35 ) — Net (loss) income attributable to Class A common stockholders – diluted $ ( 127 ) $ 201 Denominator Weighted average shares of Class A common stock outstanding 23,675,075 23,551,352 Weighted average effect of dilutive securities (2) 8,381,681 479,664 Weighted average shares of Class A common stock outstanding – diluted 32,056,756 24,031,016 Diluted net (loss) income per share $ 0.00 $ 0.01 __________________________ 1. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the period. 2. For the three months ended December 31, 2025 and 2024, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock: a. 10,026,180 weighted average shares of Class B common stock for the three months ended December 31, 2024, along with the reallocation of associated net income assuming conversion of these shares (which represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period), were excluded because the effect would have been anti-dilutive, b. 2,051,755 and 6,236,721 options to purchase shares of Class A common stock for the three months ended December 31, 2025 and 2024, respectively, were excluded because the exercise price of these options exceeded the average market price of the Company's Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 1,416,679 shares of Class A common stock for the three months ended December 31, 2025, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because the effect of including them would have been anti-dilutive. 42 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock from consolidated operations for three months ended December 31, 2025 and 2024: Three Months Ended December 31, 2025 2024 Basic net income per share: Numerator Net income $ 947 $ 3,108 Less: Net income attributable to non-controlling interest 463 1,052 Net income attributable to Class A common stockholders $ 484 $ 2,056 Denominator Weighted average shares of Class A common stock outstanding 23,675,075 23,551,352 Basic net income per share $ 0.02 $ 0.09 Diluted net income per share: Numerator Net income attributable to Class A common stockholders $ 484 $ 2,056 Reallocation of net income assuming conversion of common units (1)(2) — 800 Net income attributable to Class A common stockholders – diluted $ 484 $ 2,856 Denominator Weighted average shares of Class A common stock outstanding 23,675,075 23,551,352 Weighted average effect of dilutive securities (2) 1,416,679 10,505,844 Weighted average shares of Class A common stock outstanding – diluted 25,091,754 34,057,196 Diluted net income per share $ 0.02 $ 0.08 __________________________ 1. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the period. 2. For the three months ended December 31, 2025 and 2024, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net loss per share of Class A common stock from consolidated operations: a. 8,381,681 weighted average shares of Class B common stock for the three months ended December 31, 2025, along with the reallocation of associated net income assuming conversion of these shares (which represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period), were excluded because the effect would have been anti-dilutive, and b. 2,051,755 and 6,236,721 stock options for the three months ended December 31, 2025 and 2024, respectively, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive. In September 2022 the Company made the irrevocable election to settle the principal portion of its Exchangeable Notes only in cash, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net loss per share, if applicable. The conversion spread had a dilutive impact on diluted net loss per share of common stock when the average market price of the Company's Class A common stock for a given period exceeded the exchange price of $ 40.87 per share for the Exchangeable Notes. The Exchangeable Notes matured in February 2025 and the Company paid the entire remaining principal balance. 43 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Warrants sold in connection with the issuance of the Exchangeable Notes are considered to be dilutive when the average price of the Company's Class A common stock during the period exceeds the Warrants' stock price of $ 62.88 per share. The effect of the additional shares that may be issued upon exercise of the Warrants will be included in the weighted average shares of Class A common stock outstanding—diluted using the treasury stock method. The Warrants expired over a ninety trading day period that began on May 15, 2025. The Note Hedge Transactions purchased in connection with the issuance of the Exchangeable Notes are considered to be anti-dilutive and therefore do not impact our calculation of diluted net income per share. The Note Hedge Transactions expired in February 2025 upon the maturity and payment in full of the Exchangeable Notes. Refer to Note 8 for further discussion regarding the Exchangeable Notes. Shares of the Company's Class B common stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. 19. SIGNIFICANT NON-CASH TRANSACTIONS The Company engaged in the following significant non-cash investing and financing activities during the three months ended December 31, 2025 and 2024. which are reported on a consolidated basis. See Note 2 for significant non-cash investing and financing activities from discontinued operations for major captions on the condensed consolidated financial statements. Three months ended December 31, 2025 2024 Right-of-use assets obtained in exchange for operating lease obligations $ 435 $ 288 Excise taxes accrued on share repurchases $ 379 $ — 20. SUBSEQUENT EVENTS Transportation Market Acquisition Effective January 1, 2026, the Company completed the acquisition of a business that operates in the transportation market at the state level. The acquired business provides driver and motor vehicle insurance verification solutions. Total purchase consideration was $ 60,000 in cash payable at closing (which amount is subject to post-closing adjustment) funded by proceeds from the Company's revolving credit facility and cash on hand, plus an additional amount of cash contingent consideration payable following the closing in an amount up to $ 20,000 dependent upon the achievement of specified financial performance targets (as defined in the purchase agreement) following the closing, which contingent consideration is still being valued for purposes of our financial statements. The additional cash consideration of up to $ 20,000 , in the aggregate, is to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreement, for performance periods extending through May 2028. The Company is in process of determining the acquisition date fair values of the liabilities for the contingent consideration based on discounted cash flow analyses. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. The effect of the acquisition will be included in the consolidated statements of operations beginning January 1, 2026. The Company is still evaluating the allocations of the preliminary purchase consideration and pro forma results of operations. 44 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Recent Share Repurchases Since December 31, 2025 and as of February 5, 2026, the Company repurchased 517,054 shares of Class A Common Stock under the August 2025 Share Repurchase Program at an average price of $ 23.42 per share for a total cost inclusive of commissions and excise taxes of $ 12,244 . The repurchased shares were cancelled and retired, resulting in a permanent reduction in both the number of shares outstanding and the Company's total stockholders' equity. New Share Repurchase Program On February 5, 2026, the Company entered into a new share repurchase program (the "New Share Repurchase Program") for the Company's Class A common stock, under which the Company is authorized to repurchase up to $ 60,000 of outstanding shares of our Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases). This New Share Repurchase Program replaced a prior share repurchase program entered into by the Company on August 7, 2025, under which the Company was authorized to repurchase up to $ 50,000 of outstanding shares of the Company’s Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases), which prior share repurchase program is no longer in effect following the Company expending the maximum dollar amount under this program. This New Share Repurchase Program will terminate on the earlier of February 4, 2027, or when the maximum dollar amount under the authorization has been expended. Pursuant to this New Share Repurchase Program, the Company is authorized to make repurchases of our Class A Common Stock in the open market, through privately negotiated transactions, or otherwise, including under Rule 10b5-1 plans. In addition, repurchases under this New Share Repurchase Program will be subject to prevailing market conditions, liquidity and cash flow considerations, applicable securities laws requirements (including under Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as applicable), compliance with contractual restrictions under the 2023 Senior Secured Credit Facility and other factors. This New Share Repurchase Program does not require the Company to acquire any particular amount of shares of Class A common stock, and may be extended, modified, suspended or discontinued at any time at the Company’s discretion. 45